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Army’s about-face means new battle for business

David Larter August 27, 2012 3

The battle for housing soldiers temporarily stationed at Fort Lee is ramping back up.

After being prohibited from renting to soldiers temporarily stationed at Fort Lee, apartment owners near the base may again be able to after pushing the Army to do an about face on its off-base overflow housing policy. Apartment owners were prohibited from leasing apartments because their structures don’t always have interior corridors, a post-Sept. 11 requirement.

The Army announced in July that it had reviewed the policy and lifted the regulation. The Army released a new request for proposals that would be open to apartment owners as well as hotel owners.

“We’re very pleased that the Army has opened this business back up to apartments and corporate housing providers,” said Slayton Dabney of corporate housing company Dabney Properties. “We think apartments have a lot to offer soldiers.”

Soldiers from across the country attend the Army Logistics University at Fort Lee for weeks to months at a time to study everything from cooking to accounting. As the base expanded over the past few years, ballooning to a population of 47,000 from 32,000, apartment developers built new complexes.

The Army’s Lodging Success Program, which contracted with hotels to provide overflow housing to soldiers training on Fort Lee, was bid out to hotel owners in 2002. By earlier this year, the program had expanded to almost 20 local hotels.

But the expansion of Fort Lee and the resulting housing shortage prompted the Army in 2009 to suspend the program that directly billed the service for each hotel room night and to start paying soldiers $77 per day to find housing in town. Some chose to stay at the LSP hotels, some stayed in on-base housing and others filled up the apartment complexes around the base.

In February, the Army stopped paying soldiers the per diem and made those who could not get on-base housing stay in the 16 Petersburg hotels that had originally won contracts, which the Army claimed would save it money.

Apartment owners and corporate housing companies cried foul, because they had leased up their units with soldiers paying the $77 a day to live in the apartments, which they had furnished for the occupants.

Ivan Jecklin, who runs the Addison Crater Woods apartments for Weinstein Properties, said in February that the Army’s sudden policy shift blindsided his company and led to $250,000 less per month of rental income at the property.

A group of apartment owners hired D.C. lobbyist and retired Marine Col. Michael Shupp to change the Army’s mind about the restrictions that kept apartments out of the short-term housing.

“We’re happy to see that the Army has allowed for free and open competition,” Shupp said. “We worked through official channels, got the information we needed and provided our proposal. They were very professional in helping us work though the system, and it was good to see it working.”

Meanwhile hotel owner Nick Patel, of Kalyan Hospitality, said he didn’t think apartments were suited for short-term stays and that apartments and hotels are zoned differently.

“Lodging at Fort Lee, which the RFP is trying to address, is for transient lodging,” he said. “The hotels around Fort Lee have always been able to provide lodging at a fair and competitive price without compromising the safety and security of our soldiers. Now, through intense lobbying efforts, it seems the apartment owners have been able to have the safety and security efforts relaxed and are trying to become hotels. I don’t know if they rent apartments for a short period of time if they would be in compliance with local zoning ordinances.”

Stephen Baker, a Fort Lee spokesman, said proposals for the Lodging Success Program are due by 3 p.m. Sept. 19. The Army estimates that the service will need 382,800 guest room nights as part of the contract — which, if the final number comes in at $70 per night, for example, would mean almost $27 million in business.

Since the news of the canceled per diem rates came down in February, Jecklin of Weinstein Properties said business had picked up at the Addison Crater Woods apartments, although not just because of clientele from the base.

He attributed the turnaround to people seeking a lower cost of living in Petersburg and to the economic development in Chesterfield with the forthcoming Amazon fulfillment center and the Sabra hummus plant expansion.

 

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3 Comments »

  1. adeline brown August 28, 2012 at 3:02 am - Reply

    In my opinion, there is a need to expand the apartment business In Fort Lee. And I suggest that these apartments should be designed according to the needs of soldiers who were the usual occupants. And the safety and security of the apartments should be strictly maintained.

  2. Jd August 29, 2012 at 11:28 am - Reply

    Article doesn’t mention anything about the new 1,000 room on base lodging facility opening in October? This is 3x larger than the biggest hotel in the Richmond MSA. Last thing I would be investing in is apartments for soldiers / DOD employees.

  3. Frank Mitunis September 4, 2012 at 12:46 pm - Reply

    Unfortunately this is just the tip of the iceberg. Once these privatized for-profit companies take over the lodging at Fort Lee it will impact the apartments and local hotels significantly. A group of affected businesses has already created a website called “PAL Exposed” which highlights the problems with the privatization of Army Lodging.

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